ARMENIA LAW AND PRACTICE Contributed by: Aram Orbelyan, Narine Beglaryan, Artur Hovhannisyan, Lilit Karapetyan, Sarkis Knyazyan and Shushanik Stepanyan, Concern Dialog
same time, the presence in the organisation of works councils elected by employees should not interfere with the exercise of the trade unions’ functions. Employees’ representatives have the power to develop charters, conduct negotiations, propose organisational improvements and participate in decision-making processes. They also over - see labour law implementation, have access to employee information, and can propose meas - ures for better working conditions and fair com - pensation. They can organise lawful strikes and appeal to the court against violations. Employ - ees’ representatives play a crucial role in pro - tecting workers’ rights and promoting collabora - tion between employees and employers. If an employee’s representative violates the rights of the employer or breaches legislation or agreement norms, the employer has the option to seek legal action through the appropriate procedures defined by the legislation, request - ing the cessation of the representative’s unlawful activities. Employee representation is not a widespread practice in Armenia. There are some single cases of the practice, and it is expected to develop in the future. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Employees pay income tax on their employment remuneration. Employers act as tax agents for their employees. They calculate their employees’ income tax due every month and pay it by the 20th day of the
following month. So effectively, employers bear liability for any wrong calculation or late payment of those taxes and payments. According to the Tax Code of Armenia, the income tax rate for employees has been 20% since 1 January 2023. Besides income tax, employees must also pay a mandatory social security (pension) payment with the following rates: • 5% on salary up to AMD500,000; and • AMD25,000 plus 10% on salary above AMD500,000, but not more than AMD87,500 (total cap). 5.2 Taxes Applicable to Businesses The following tax regimes apply in the RA. • General Taxation: In this case, taxpayers gen - erally calculate and pay VAT and profit tax. • Special Taxation Regimes: (a) Turnover Tax: Taxpayers calculate and pay turnover tax, which replaces VAT and/ or profit tax. (b) Micro-Enterprise Taxation System: The taxpayer, by carrying out the relevant activities defined by law, is exempt from all types of state taxes related to the enterprise. • Profit Tax: The object of taxation is the tax - able profit, which is the gross income less expenses, and the profit tax rate is: (a) 18% for residents and non-residents that have a permanent establishment in Arme - nia (including a branch); and (b) 20% for non-residents who do not have a permanent establishment in Armenia. • VAT: The VAT rate in Armenia is 20%. • Turnover Tax: Only resident entities and individual entrepreneurs can pay turnover
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